The Three Most Important Interview Questions On Wall Street

Pop quiz: which of the following 3 questions is most important in acing your interviews?

A. What's the difference between Chapter 7 and Chapter 11 bankruptcy in a restructuring?

B. How do you decide to finance a company with debt vs. equity?

C. How do you take into account the competitive advantage of a firm in a valuation?

Got it? 30 seconds more to think if you're still struggling…

Ok, time's up.

The answer: Unless you made up your own response and said, "D. None of the above," you were wrong.

That's not to say that the questions above are unimportant. It's just that none of them will make or break your chances of getting an offer.

Any interview comes down to 3 key questions about yourself: Are you smart, can you do the work, and do I like you? (no, not me - the interviewer)

And chances are, you're getting 1 of these questions wrong - but it's not the 1 you think you're getting wrong.

But No One Has Ever Asked Me If I'm Smart Before!

Are you sure?

If you've ever been asked, "Why we should we hire you?" you've heard these questions - only they've been 1 big question rather than 3 smaller ones.

But even if you've made it through interviews without getting that specific question, the 3 points above come across in everything you say.

Are You Smart?

This one comes across in where you went to school and what your grades were (not as applicable for senior-level hires).

But outside that, your "intelligence" comes across in how well-informed you are on current events and how articulate you are when explaining yourself.

There's not much you can do to change your interviewer's perception of your academics, but you can always polish your presentation skills.

You need to know something about current events, the stock market, and recent deals - there's no need to read the Deal Journal for 2 hours every day (though it is quite good), but if you can't explain the subprime crisis or 1-2 recent deals you've heard about, you're in trouble.

But almost everyone knows all this - and the dirty little secret that few tell you is that investment banking is not rocket science. You need to have some proficiency with Excel, but most of what you do is grade school-level math.

Can You Do the Work?

Here's where it gets trickier, and where those who haven't had banking experience sometimes struggle. You need to show evidence of being able to "burn the midnight oil" over extended periods, as well as all the other "banker-like" qualities (attention to detail, interest in business, analytical skills, etc.).

You need to think about everything on your resume/CV and how it ties back to these core requirements. And when you get a question on what you've done previously, you have to do a "soft-sell" of how your experience relates to what's required in finance.

Let's say you get asked about why you should be hired over everyone else there, even though you've had no finance experience and have spent most of your time on music-related activities.

You would point out that you had to pull long hours over months to prepare for competitions and that you had to be really attentive to detail because you were presenting to hundreds or thousands of people.

I've seen some interviewees stumble on this point, but most candidates "get" that you need to spin your experience into sounding relevant.

The final question is what gives many well-qualified interviewees the most amount of trouble.

Do I Like You?

If you already have solid experience, this is the question you're probably getting wrong.

Anyone who has interviewed people for an entire day is usually exhausted by the end - and the last thing he/she wants to hear is a boring story about how you're a "finance guru" and this is your lifelong dream.

Here are the most common mistakes I've seen:

Going through your "story" just focusing on your work experience without saying anything unique about your background.

Trying to make yourself sound like a finance guru even if you're from a completely different background.

Not having a good answer to what you do outside of school/work.

Not Just Interviews, Resumes As Well

This doesn't just come up in interviews, of course. Anyone reviewing your resume/CV is also trying to answer those 3 questions: Are you smart, can you do the work, and do I like you?

That's why I recommend the 3-part Education/Work Experience/Skills, Activities & Interests structure that you see on my sample resumes. Each section addresses one of those questions.

Oh, and (Business) School As Well

A friend who worked at Morgan Stanley a few years back was telling me about his plans to go to business school after working at a hedge fund for a few years - but then explained the problem he had:

"The problem is that everyone is applying to b-school from investment banking / finance backgrounds - sure I have a brand-name, but I don't know how to make myself stand out."

And that's exactly what admissions committees may think, too - especially with a rising number of applicants in this recession, the "likability" factor is more critical than ever.

"If you come across as a traditional PE dude in terms of profile *and* orientation (everything about you screams "I'm a finance guy through and through" no matter what you say in your applications), it can become more random simply because there's other people who have such similar profiles as you will. And they are NOT going to take all of you in, especially since there's a lot more applicants with PE background now than there was 5-10 years ago (simply because the industry has grown — more headcount overall means more potential applicants)."

He's discussing some broader themes there on diversity, but on a micro-level the same point applies: if you come across as "standard" you are at a disadvantage, even if you've worked at Goldman Sachs and KKR.

How to Make Them Like You

Ok, so how do you find what's interesting about yourself and present it effectively? It's different for everyone, but here are a few specific suggestions:

1. Make sure you incorporate your real background into your "story" - not what you think they want to hear.

If you worked for the CIA and your local congressman, talk about how your interest in politics and free trade issues or your exposure to conflicts in the developing world has made you more interested in finance; if you were in a non-profit group that merged with another one, talk about how that piqued your interest in M&A.

Don't pretend that you wanted to be Gordon Gekko since the dawn of time.

2. Include at least 1 point that's not related to work/school in your "story" - that missionary trip to Turkey, your miniature race car collection, or how you became a Shaolin monk one summer at the temple.

Too many people miss this one and take themselves way too seriously - which is exactly what they don't want to hear.

Especially after 8 hours of non-stop interviews.

You don't want to make your kung fu training the highlight of your "story," but touching on it briefly can be a huge help.

3. Make some new friends… no, seriously.

It goes back to what we said in Superday Zen - if you've been practicing interviews with your friends or anyone in the industry, chances are that you've focused too much on technical questions.